Exam 8: Location Strategies

Suppose that the market has a 30% chance of being favorable and a 70% chance of being unfavorable. A favorable market will yield a profit of $500,000, while an unfavorable market will yield a profit of $20,000. What is the expected monetary value (EMV) in this situation?

Which of the following is a location analysis technique typically employed by a manufacturing organization?

A location decision for an appliance manufacturer would tend to have what type of focus?

An executive conference center has the physical ability to handle 1,500 participants. However, conference management personnel believe that only 1,300 participants can be handled effectively for most events. The last event, although forecasted to have 1,300 participants, resulted in the attendance of only 1080 participants. What are the utilization and efficiency of the conference facility?

Which of these factors would be considered when making a location decision at the site level?

What kinds of location decisions are appropriate for the use of locational cost-volume analysis? Write a brief paragraph explaining how the method can assist an operations manager in choosing among alternative sites in making a location decision.

A capacity alternative has an initial cost of $30,000 and cash flow of $20,000 for each of the next four years. If the cost of capital (i.e., interest rate) is 5 percent, the net present value of this investment is:

Basic break-even analysis typically assumes that:

Investments with identical net present values will also have similar salvage values.

The center-of-gravity method is used primarily to determine what type of locations?

Effective capacity × Efficiency equals:

A firm sells two products. Product A sells for $100; its variable cost is $40. Product B sells for $150; its variable cost is $75. Product A accounts for 70 percent of the firm's sales, while B accounts for 30 percent. The firm's fixed costs are $1 million annually. Assume the firm operates 300 days per year. How many dollars of sales does the firm need to generate per day to break even?

Which of the following statements regarding fixed costs is TRUE?

________ occurs when competing companies locate near each other because of a critical mass of information, talent, venture capital, or natural resources.

Why is the capacity decision important?

Which of the following represents a common way to manage capacity in the service sector?

Identify five factors that affect location decisions at the site level.

A firm is weighing three capacity alternatives: small, medium, and large job shop. Whatever capacity choice is made, the market for the firm's product can be "moderate" or "strong." The probability of moderate acceptance is estimated to be 35 percent; strong acceptance has a probability of 65 percent. The payoffs are as follows. Small job shop, moderate market = $24,000; small job shop, strong market = $54,000. Medium job shop, moderate market = $20,000; medium job shop, strong market = $64,000. Large job shop, moderate market = -$40,000; large job shop, strong market = $96,000. Which capacity choice should the firm make?

Which of the following is NOT one of the predictive variables chosen by the profitability regression model used by La Quinta Inns?

La Quinta Inns has a competitive edge over its rivals because it: